Financial Supervisory Service Announces Key Inspection Items... "Encouraging Thorough Business Report Preparation"

[Asia Economy Reporter Eunmo Koo] The Financial Supervisory Service (FSS) will announce key inspection points of business reports in advance to encourage the preparation of thorough business reports.

On the 25th, the FSS announced that it will notify key inspection points of business reports in advance to encourage listed companies and others to prepare thorough business reports and minimize omissions due to negligence. The FSS plans to review the pre-announced key inspection points for a total of 2,789 companies subject to business report submission, including those with December fiscal year-ends.

The key inspections are divided into financial and non-financial matters. Among the 14 financial items, the appropriateness of disclosures related to the external audit system (9 items) will be inspected. The inspection will cover disclosures on the operation status of the external audit system and internal accounting management system, compliance with revised accounting audit standards such as key audit matters, and more. The FSS explained, "This is to enhance the reliability of accounting by understanding the status of external audits and internal accounting operations and to encourage faithful implementation of new systems aimed at strengthening audit quality."

Compliance with corporate disclosure form preparation standards for financial disclosure items (3 items) will also be examined. Since financial information such as corporate performance and financial status is important and essential for investment decision-making, the inspection will cover disclosures on the status of allowance for doubtful accounts, inventory status, and disclosures related to the introduction of new K-IFRS standards. Additionally, disclosures on consultations between internal audit organizations and external auditors, as well as matters related to the revision of comparative financial statements, will be reviewed.

Inspections on non-financial matters will be conducted across 7 items. First, the appointment of accounting and financial experts within the audit committee and their related experience will be examined. The use of direct financial funds will also be inspected. Specifically, compliance with revised forms regarding the purpose of fund usage and whether reasons for changes are stated when there is a difference between the initial plan for public funds and actual usage will be scrutinized.

Furthermore, the FSS will inspect the overview of major shareholders, status of executives, individual remuneration, disclosures of specially listed companies, and summaries of major contracts and research and development activities of pharmaceutical and bio companies.

The FSS plans to individually notify companies and auditors of any deficiencies found during the inspection by May and guide them to voluntarily correct them. Additionally, if the disclosed contents are thorough, the cases will be selected as exemplary and disseminated through disclosure explanation sessions and other means.

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